SBA Denying Requests for Assistance from Qualifying Concert Venues

In December, Congress passed the $ 16 Billion Enclosed Venue Operator Grant Program to provide a financial lifeline to live performance and event venues, event promoters, movie theaters, museums, and talent representatives that have been decimated by the pandemic. Covid-19. But entertainment company owners tell The Intercept that the Small Business Administration, the agency charged with administering the program, has flatly denied many companies that they should qualify without explanation.

At first, the SVOG program was plagued with technical problems that delayed your ability to accept applications for months. In June, two months after it began accepting applications, it had issued a mere 31 scholarships. But now the money seems to be flowing: in September, it had issued more than 12,000 subsidies. Instead, the problem today is that many companies cannot receive the funds.

As of September 27, the SBA has denied almost 30 percent of SVOG applications. Compare that to the Paycheck Protection Program, the $ 953 billion fund to help businesses cover payroll and other expenses during the pandemic, which it had approved. 97 percent of applications from May. While companies can appeal the SBA’s decision, the agency does not tell them why it has been denied, so they must guess based on complicated and inconsistent criteria.

And unlike the Restaurant Revitalization Fund, which had dispersed With all of its $ 28.6 billion funding for June, the SBA has only awarded $ 11 billion of the $ 16 billion total as of Sept. 27, so there is still money left that could be awarded to more companies.

The SBA has “created winners and losers in the same industry because of the arbitrariness of the awards,” said Andrew Preble, owner of the escape room company Escape My Room in New Orleans. He was denied, and yet he knows that an escape room just blocks from hers received grant money.

The SBA has “created winners and losers in the same industry because of the arbitrariness of the awards.”

At least two lawsuits have been filed against the SBA for denials. Kaos Productions, which operates Spin Nightclub in San Diego, a live entertainment venue for onstage performances by musicians, DJs, bands, and individual artists, was denied on both the initial request and on appeal despite showing compliance with the eligibility criteria for live venues, including submitting a letter from the San Diego Police Department describing your permission to operate solely as a live music venue and a letter from one of your direct local competitors endorsing your eligibility, as per your demand. “Spin needs an SVOG award for precisely the reason Congress created the SVOG Program – to help eligible live entertainment companies like Spin recover from major setbacks they have experienced due to the pandemic,” the lawsuit states. .

Colors Worldwide Inc., which promotes live onstage performances by DJs and R&B presenters in Los Angeles, was similarly denied on both the initial request and the appeal, despite including a letter from its certified public accountant verifying that Its main commercial activity is the promotion of live venues, according to its separate demand. The SBA declined to comment on pending litigation.

The SVOG program was created specifically to help venues that were closed due to public health needs during the pandemic, and eligibility is strictly limited to live performance venues, cinemas, and museums with indoor spaces. However, some SVOG winners include outdoor activities and spaces, such as a 5K “daisy madness” race in California, a cross-shaped monument on a hill in Illinois, and a golf tournament in Oregon, as well. What a strip club, despite program eligibility Excluding “Live performances of a lewd sexual nature”.

“The governing statute of the SVOG program is complex and includes 83 eligibility criteria, which vary for each type of entity. The SBA is determining eligibility based on these criteria, ”SBA spokeswoman Andrea Roebker said in an email.

“Because the SVOG program is emergency aid and the SBA wants to ensure that everyone who is eligible receives funding, SVOG applicants had the opportunity to correct errors and / or provide additional information to the SBA through a process of technical fixes, which the SBA deployed more than 9,000 times to support SVOG applicants, ”said Roebker.

He noted that the SBA published a “eligibility matrix“For business owners to understand why they may have been denied and held” multiple “business hours and briefings on the appeals process. All applicants whose initial application has been denied can appeal the decision, he added, which he said is “rare for a federal grant program.”

It did not respond to a request about the number of denials that were overturned on appeal, saying, “At this point, the SBA has issued very few final decisions on appeals.” On Sept. 3, the SBA sent an email to applicants who had already had their appeals denied that the agency was going to “conduct a more thorough evaluation” of all appeals, according to an email shared with The Intercept.

Business owners condemn what they say is a lack of transparency about the denials. The agency refuses to tell them why a certain application was denied, making homeowners feel like they are shooting in the dark when they appeal. “It’s very difficult to have a successful appeal if you don’t know why you were denied in the first place,” said Preble, the owner of the escape room.

Preble thinks the problem is that the SBA found itself trying to weigh in on what counts as arts and entertainment. Preble knows his line of business is new, but argues that it is live entertainment, not so different from a play. He says he met all the criteria for a live venue, including the actors who perform, the lighting and sound systems, and the employees who handle ticket sales, marketing, and security. By a random stroke of luck, he says, he called his SBA office and contacted someone who was willing to read the notes on his application to explain why he was denied. “They said that even though we hired actors, it was not considered a performance,” he said. “It is such an arbitrary thing to decide what is and what is not a performance.”

“It is such an arbitrary thing to decide what is and what is not a performance.”

Preble’s business was booming before early 2020; almost every year since 2014, I had opened a new location or experience. But it has yet to make a profit during the pandemic. An escape room not only requires people to be together inside, but the vast majority of its business also comes from tourists, many of whom have stopped traveling to New Orleans. It reopened in the summer of 2020, but only served 15-20 percent of regular customers. Business recovered earlier this summer, but declined when the Delta variant increased and Hurricane Ida struck the area. Meanwhile, costs have increased to keep rooms sanitized and to space customer groups. “We have been incredibly close to bankruptcy all this time,” he said.

Preble enthusiastically followed the debate in Congress on whether and how to fund the live venues. When the SVOG program was approved in December, “it was a huge relief,” he said. The money would have allowed him to pay off the debt he has incurred, including back rent and other fixed expenses he has not been able to cover, and keep his business going.

“It seemed like we were going to get help and staying open would make some sense,” he said. But if you had known you weren’t getting any of the grant money, you could have decided to stay closed for the past few months and save your resources for when the world returned to normal. Without the money from SVOG, you are not sure that you will be able to pay off all your loans or even continue to operate for a long time.

Clover Productions, a family business that produces consumer trade shows in Farmington, Minnesota, has also been “crushed by the pandemic,” said Vice President Chris Navratil. All programs have been canceled since February 2020, which means that the company has not generated revenue. “I have not slept since March 2020,” he said. Shamrock’s first show on the pandemic is scheduled for December, but Navratil isn’t sure if it will actually happen.

So he jumped at the opportunity to apply for money for SVOG. She applied as a live venue promoter, as her business handles everything for her events, including the rental of facilities, the purchase of advertising, and the provision of live entertainment such as singing acts. He spent two weeks putting together his application only to be denied without knowing why. He submitted the request on August 5 and received the denial on August 12. He sent an appeal on August 24 and has yet to receive a response. You have tried calling the SBA to find out why it was denied, but they refuse to answer your questions.

Navratil knows of other companies like yours that have received mixed messages when communicating with their representatives in Congress – some said yes, companies like yours qualify for the money, while others said no. “In Washington, there wasn’t even a set, who is this show for and who isn’t,” he said with palpable rage. “It is everywhere, there is no rhyme or reason.” Some businesses like hers have gotten the money, she said, while others have been denied like her.

When I asked him what it would mean if his denial was not reversed, he paused for a long time and sighed. “It means that we are going to have many sleepless nights,” he said.

“We did our part, we closed our doors, our business has suffered,” he added. “Honestly, the government has an obligation to help us survive.”

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